Upstart has successfully raised $138.2 million over seven funding rounds, positioning itself as a significant player in the AI-driven lending space. The platform leverages artificial intelligence to enhance access to affordable credit while minimizing risks and costs for its banking partners.
Keep reading to delve into the details of Upstart's funding journey and the investors who have backed this innovative lending platform.
What Is Upstart?
Founded in 2012, Upstart is an AI-driven lending platform based in San Mateo, California. The company aims to improve access to affordable credit while reducing risks and costs for its banking partners.
Upstart was co-founded by Andy Palmer, Anna Mongayt, Paul Gu, Jeff Keltner, and Dave Girouard. The platform leverages artificial intelligence to assess creditworthiness beyond traditional credit scores, offering a digital-first lending experience.
With a team of 201-500 employees, Upstart continues to innovate in the lending space, providing higher approval rates and lower loss rates for banks.
How Much Funding Has Upstart Raised?
- Seed Round
- Amount Raised: $1,750,000
- Date: August 2012
- Motivation Behind the Round: Initial funding to explore income share agreements, which charged borrowers a fraction of their earnings.
- Series A
- Amount Raised: $5,900,000
- Date: April 2013
- Lead Investors: First Round Capital
- Motivation Behind the Round: To validate the business model, expand the platform, and enhance interactions between backers and funded individuals.
- Series B
- Amount Raised: $10,500,000
- Date: October 2014
- Motivation Behind the Round: To scale operations and further develop the AI-driven lending platform.
- Series C
- Amount Raised: $35,000,000
- Date: July 2015
- Lead Investors: Third Point Capital
- Motivation Behind the Round: To hire additional data scientists, expand the team, and secure a larger office space to accommodate growth.
- Series C
- Amount Raised: $32,500,000
- Date: March 2017
- Motivation Behind the Round: To enhance the AI algorithms and expand the lending portfolio.
- Series D
- Amount Raised: $50,000,000
- Date: April 2019
- Motivation Behind the Round: To accelerate growth and expand into new lending markets.
Total Amount Raised: $135,650,000
Current Valuation: $750,000,000 (~estimated)
Key Investors
- Third Point Capital
- Details: Third Point Capital is the venture arm of billionaire Daniel Loeb's Third Point hedge fund. It has a reputation for making strategic investments in high-growth companies.
- Investment Focus Areas: Hedge funds, startups, technology.
- Notable Investments: N/A
- First Round Capital
- Details: First Round Capital is a venture capital firm that specializes in early-stage investments. It played a key role in Upstart's pivot from income share agreements to personal loans.
- Investment Focus Areas: Technology, startups, early-stage companies.
- Notable Investments: Uber, Square, Warby Parker.
- Founders Fund
- Details: Founders Fund is a venture capital firm known for its investments in technology companies across various stages. It was one of the participants in Upstart's Series A funding round.
- Investment Focus Areas: Technology, space exploration, healthcare.
- Notable Investments: Facebook, SpaceX, Palantir Technologies.
- Khosla Ventures
- Details: Khosla Ventures is a venture capital firm that focuses on technology and clean technology sectors. It participated in Upstart's Series A funding round.
- Investment Focus Areas: Technology, clean technology, healthcare.
- Notable Investments: Square, DoorDash, Impossible Foods.
- Collaborative Fund
- Details: Collaborative Fund is a venture capital firm that invests in companies that are collaborative and community-focused. It also participated in Upstart's Series A funding round.
- Investment Focus Areas: Community-focused companies, technology, sustainability.
- Notable Investments: Lyft, Kickstarter, Reddit.
What's Next for Upstart?
Upstart's future looks promising as it continues to leverage data-driven methods to assess the creditworthiness of millennials, a demographic often underserved by traditional lenders. With nearly 9,000 loans issued and $800 million in loans so far, the company is poised to capitalize on the growing trend of using AI to disrupt conventional lending practices.
As Upstart scales, future fundraising opportunities seem likely, especially given the successful Series C round and ongoing fundraising efforts. However, challenges such as convincing the broader industry of their approach and competing with established fintech companies like LendingClub remain. The company's innovative model and high-profile backing suggest a bright future, but navigating these hurdles will be crucial for sustained growth.
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